solid close to the week, page-21

AUT presentation is talking about only the free-carry wells being drilled this year.

That does not mean that that Hilcorp won't find a third rig to press on with S/L whilst drilling Longhorn and Ipanema.

ADI & AUT have plenty of cash in the bank to cover Sugarloaf new wells at 10% WI each. They are not dependent on production cash for an extra rig on Sugarloaf.

AUT has mentioned a possible capital raising in 2011 when the new drilling programme is decided - simultaneous drilling after free-carry on Longhorn (25% WI) Ipanema (30% WI) and S/L (10% WI) will obviously be a strain. That does not affect ADI.

Can't comment on EKA - don't follow them.

EME has a 3% WI but 9% of Kennedy and 10.2% of Kowalik (if it is sorted out), so there is a potentially higher level of revenues that could carry the cost of future drilling on S/L.

Impossible to compare companies until there are further drilling results. However, AUT and its broker seem to be confident and Hilcorp bought in.

I switched about 13% of my ADI holding into AUT at about 1.35 ADI : 1 AUT and am happy to hold at that level.

MY analysis is that AUT is worth about 70% ADI if the value of Longhorn and Ipanema is insignificant or about 290% ADI if Longhorn & Ipanema are comparable.

In other words there is the chance of halving or doubling by reference to ADI price at that exchange value. I obviously judge it more likely to double than to halve (that does not mean that I expect it to reach either limit). But that's personal judgement only.

In the shorter term, with Easley and Morgan results likely to be out or pending before drilling on Longhorn commences, I expect ADI to be the more excitable of the two. Then eyes will start to follow AUT. But you never can tell with the market and AUT is doing a presentation this week. As I can only do limit trades from the UK during the depths of night (our time) I cannot do as Nursery does and more regularly trade disparities in the share prices.